Masterclass with Super Investors – Book Review

Contributed by: Jagpreet Bhatia, VA Capital

In the category of practical investment management books, I found it to be one of the best reference guides, especially so in the Indian context. The book is written in the original OID (Outstanding Investor Digest – the most sought after investment journal published in the USA, bringing forth in-depth conversations with the best investment managers) format, where the Portfolio Managers are cross-questioned on their investment themes and stock ideas. The book gives a 360-degree view of multiple managers, all of which are following very different strategies – to help novice learners understand that there are multiple ways of practicing the art of Value Investing. The managers talk about their broad philosophy and current themes that they are observing in recent Indian business landscape, and drill it down to how they select individual stocks, decide on entry/exit prices, and most importantly, take decisions on portfolio allocations.

The book consists of a wide variety of investors and their idiosyncratic styles. Some started with zero capital, whereas some had prior family wealth; some are very diversified, whereas some are concentrated. Similarly, some are pure Grahaminian (balance sheet numbers oriented analysis), whereas some are qualitative (understanding business as a full business acquirer would do) in their analysis. Moreover, some like to interact with management and influence management to take minority shareholders friendly actions, whereas others like to act as passive investors.

Such a variety of processes not only helps a learner to hone their own skill set, it can also help one think about how one can create a business around investment management or how one can maximize the potential of building wealth for oneself and others.

The reader will also get to notice multitudes of shades of personalities amongst these Super Investors – ranging from business-minded thinkers, to dealmakers, to aggressive takeover artists, to mathematical wizards, to networkers, to turnaround artists, to win-win solution finders, etc. A reader will notice that a wide variety of thinking tools can be built in one’s repository of available methods to perform in securities markets.

These super investors were also very open to discuss their own emotional states of mind during difficult periods in the markets. Some explained how difficult it is to sell during uptimes, as it appears foolish to the novices and retail investors – how immense mental fortitude is needed to stand by the decisions of sale, apparently appearing stupid during the upswings. Equally important is the stamina to hold on to a business during free falls and decisions to hold over, over decades. They discuss the art of balancing emotions between activity and patience. How managers, working with public capital, have to develop a strong skin, and stand by the emotional storms and client’s heat during the falling prices. One can vicariously understand the pains born by the Super Investors during the bear markets. As a know-nothing novice investor, one can observe by getting into the shoes of these investors and empathize with them on the brutality of the markets and its effects on their personal life.

These super investors had also been very generous and open to sharing their mistakes made over the last few decades. Mistakes like wrong thinking on themes, wrong promoter selection, too much activity, not allocating adequate amounts of capital to single bets, poor allocations, giving too much weight to market noise, etc are visible in interactions with these managers.

Such investor’s background also highlights that continuous learning is more important than expensive conventional schooling! Few managers are completely self-taught in concepts like a business, accounting, entrepreneurship, social networking, etc. They show that to survive in the markets, curiosity, questioning pre-formed existing beliefs and self-education are some of the most important skills. It gives lots of confidence to autodidactic self-learners.

The authors have done good work of giving financial data and charts wherever a security is discussed by these investors. It provides a more in-depth understanding of the thinking process of investors. The accompanying charts show the art of buying process, averaging up process, averaging down process, lengths of holding periods. Moreover, it also explains how decisions were made during stock drawdowns (fall in stock prices from the tops) and finally the selling process or taper downs (sell downs made over a long period of time).

Such a hidden wealth of knowledge regarding investment thinking wouldn’t have been accessible to the learners, in such an engaging bare-all conversational format, without the efforts and patience of the authors. The authors fruit of work – finding these hidden investors, reaching out to them, persistently following to engage them, traveling all over the country to reach them – is finally shaped into a very interesting and thrilling book. To any learner, this acts as a go-to the Bible on India’s finest investment minds.

Overall, looking at these investors journey over last three decades, it gives us immense confidence, that with time, patience, curiosity and continuous learning, building massive wealth is not out of reach for an inquisitive learner.

Readers can order the book online at – www.altaisadvisors.com/masterclass/book. It is available in hardcover only – no kindle edition.